CHAPTER 2
PHARMACEUTICAL RESEARCH & DEVELOPMENT
“The Indian pharmaceutical industry should turn their attention to invent new drugs from
molecule levels and each manufacturing unit should try to become invention centres, opined Dr
APJ Abdul Kalam, former President of India”.
1.1 INTRODUCTION
Research and Development is defined as a process of scientific approach to discovering relevant
information on a specific topic. It gives new knowledge about products, processes and services
that meets the gap existing in an economic or a social system. Organization for Economic Co-
operation and Development (OECD) defines research and development as a “creative work
carried out on a systematic manner with an aim to increase the standard of knowledge and its use
to develop new applications” (OECD 2002).
Research and development is an on-going process to revitalize the knowledge and expertise to
the development a specific or new technology, improve operational efficiency and effectiveness,
reduce cost and meet social and environmental challenges faced by the humanity. Technological
advancement contributes to the economic progress of the nation thus creating a modern state that
meets the growing needs of its people and self-sufficiency.
In today’s competitive world R & D is a crucial factor in determining nation’s capabilities and
competitiveness and the pace of technological progress is directly proportional to the efforts on R
& D. Therefore, the level of R & D investment acts as a reliable indicator of country’s
innovative capacity. In addition, a country can be called self-reliant only when it can solve
economic, social and healthcare problems of its people. Indeed, nations which constantly invest
in R & D fare better and outperform others in economic development.
In a country, R & D is generally undertaken by the industry, academia and government
institutions. However, industry undertakes R & D depend on the scientific field in which it is
based and the extent of competition it faces in the sector. Though companies have their own
research capabilities in-house, they also undertake collaborative research with other
organizations, institutions and universities. In certain cases, they acquire technology from other
enterprises through licensing or takeovers. About 84% of worldwide research for basic drug
discovery comes from public institutions (Light, BMJ, 2012), and the proportion of public
money only rises where life-saving drugs are concerned.
It is observed that approximately twenty four percent of more than 250 drugs approved by the
USFDA since 1998 to 2007 have come from public research institutions or biotechnology firms
(Hadzimichalis N. 2013),later on these molecules transferred to private companies for further
research and development in order to make a successful medication to be sold in the market.
This confirms that the fundamental role of discovering drugs, in most cases, are initiated from
the research laboratories of universities, which suggests that the transfer of technology is an
important part to the discovery of new drug molecules in the world. In fact university research,
in many cases, has led to the development of well-known discoveries in number of therapeutic
areas. In addition, the university research has harnessed the critical research technology and
chemistry skills required at the basic stage of drug development, which include different
vaccines, medical equipment and utility items.
While the role of large pharmaceutical companies is integral to the development of novel drugs,
it is essential universities and biotechnology firms are made as part of pharmaceutical research
and development. Let industry-academia collaborations represent the future of drug
development and create many more novel drugs from technologies developed by these
institutions.
1.2 PHARMACEUTICAL RESEARCH & DEVELOPMENT
Pharmaceutical research and development (R & D) refers to the discovery of either a new drug
molecule or improvement of existing molecules or processes for the effective treatment of
diseases. In short, researchers use their scientific knowledge and skill to develop new molecules,
test new substances, evaluate existing drugs and create new dosage forms. Thus, it may say so
that pharmaceutical R & D discover New Chemical Entities (NCEs), develop Novel Drug
Delivery Systems (NDDS) or generic drugs. Pharmaceutical research offer promise for finding
new treatments to the human race. It helps in reducing human mortality, improve quality of life
and limit the spread of many communicable diseases pausing risks to public health.
Research and development is the backbone of the pharmaceutical industry, hence companies
should research, discover, develop, manufacture and market or distribute medications in the
context of healthcare to the humanity. Industry must engage in the discovery of new drugs to
solve the problem of public health. The survival of the industry critically depended on the
discovery of as many new molecules as possible. Therefore, R & D is considered to be the key
to the growth of pharmaceutical industry which is why investment in R & D is critical world
over. In other words, the responsibility of discovery and development of newer drugs lies with
the pharmaceutical industry across the world.
1.3 THE PROCESS OF DRUG DISCOVERY AND DEVELOPMENT
In principle, drug research should be in the domain of medical college and of physicians who
undertakes various clinical studies on patients while in their normal clinical practices. Though
clinical trials were not their primary focus area of work, but they had done that with a view to
provide better treatments to patients without seeking any financial benefit. A number of
pharmaceutical inventions were made in these clinics by merely identifying active ingredients or
by chance. Subsequently, successful drug molecules from their clinical experiments were tested
in animal cells and later on human for safety and efficacy.
However, approach to modern drug discovery is quite different where researchers first try to
learn how a particular infection or disease is controlled at the molecular and physiological level
and then targets at the symptom based on the knowledge already acquired. Researchers, with
their intrinsic knowledge of chemistry, guided by pharmacology and experimental sciences have
been able to make great contribution in the area of drug discovery and development. It is further
noted that advancement of molecular biology coupled with genomic sciences have created deep
impacts on the process of drug discovery in the world. The more recent contribution to drug
discovery has come from the understanding of the shape of biological molecules at atomic level,
which has helped scientists across the world to design drug candidates.
Despite all the advancement in understanding human biological systems, technology and
research skills, the drug discovery is still find to be an enduring process plagued with challenges,
protracted, and expensive preposition for the industry. It may take anything between 12 – 20
years and billion plus dollars for a drug molecule to travel from the research lab to the patient
(Mathew Herper 2012). It is because of these reasons the rate of drug hitting success is very low.
However, the huge claim of expenditure for developing new drug molecule has been strongly
disputed by various drug experts including Dr. Brian Druker, the creator of cancer drug
(Gleevec) of Novartis.
Drug Discovery Process:Discovery process begins with the basic identification of an unmet
medical condition in which there is no specific treatment available to the clinical condition that
motivates to initiate a research project. A research project involves various steps, starting with
the identification of candidates, followed by synthesis, characterization, and screening of
molecules, which then go for testing therapeutic efficacy. The data so generated helps to
develop hypothesis that the inhibition or activation of a protein or pathway will result in a
therapeutic effect in disease state. During this process, if a compound demonstrates therapeutic
value, it will then goes from drug discovery stage to drug development.
Drug Development Process: It is the scientific process undertaken to bring out a novel drug
candidate into a human-grade medication after identifying the lead compound through various
process of drug discovery. The drug development process can be divided into three distinct
category of study:
I. Discovery (process of identifying and screening compounds)
II. Pre-clinical Testing (laboratory and animal studies), and
III. Clinical Testing (trials on human)
I. Discovery: This is the first stage in which a number of compounds approximately 5,000
– 10,000 are identified, screened, which are then selected for further studies.
II. Pre-clinical Testing: It is the function of drug development of the selected compounds
prior to human clinical trials in order to assess various drug parameters like
pharmacokinetics, metabolism, safety and toxicity on experimental animals in the
laboratory. The other objective of pre-clinical test is to recommend the right dose and
schedule to be used for the first time in a human clinical trial. In addition, the process
establishes the physicochemical properties such as its chemical makeup, stability,
solubility and suitability.
III. Clinical Testing: This is the clinical testing stage where clinical trial processes are
conducted on human beings which involve three major steps starting from Phase I to
Phase III:
• Phase-I trials are usually conducted in a small number of healthy volunteers
(approximately 20 – 100) to determine the safety and dosage.
• Phase-II trials are conducted in sick patients (approximately 100 – 500) mainly to get
an initial reading of the efficacy of drug and to explore further test on the side effects
of the drug to ensure safety.
• Phase-III trials are highly critical trials where sufficiently numbers of human
subjects (approximately 1000 – 5000) are tested to determine further about the
effectiveness and the reactions to long-term use of the drug molecule.
Human clinical trials are carried out to determine the long-term or chronic toxicities
(fertility, reproduction, immune system, etc.), which previously was not monitored. The
drug compound will undergo carcinogenicity test too to rule out the possibility of any
cancer causing substance involve in it. If the compound emerges from these tests with an
acceptable level of toxicity and safety profile, and have demonstrated the desired effect in
clinical trials, it can then be moved on to a human-grade medication.
FDA Review and Approval: After successful completion of Phase III trial application
stating the safety and efficacy of the investigational drug and containing all information
collected during the drug development process is submitted to the regulatory authority of
the country. In the US such applications are called New Drug Application (NDA), which
is submitted to the FDA.
Phase IV is the post-marketing surveillance and pharmacovigilance studies, in which,
safety update reviews are carried out when drug is in the market and monitored to
identify any unforeseen side effects.
The table 2.1 below provides a descriptive representation of various drug discovery stages
starting from identification and screening of thousands of compounds to clinical testing and
validation, along with number of years taken at each stage.
Table 1.1: Drug Discovery and Development Process
5,000 to 10,000 Compounds Yield 1 New Drug to Market
Step Number of Compounds
Number of Years
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Discovery 5000-10000
Preclinical Study
250
Phase I Clinical Trials
5
Phase II Clinical Trials
1
Phase III Clinical Trials
1
FDA Review/ Approval
Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University, 1995
1.3.1 The Drug Approval Process in India
The Indian pharmaceutical industry is regulated by Drugs and Cosmetics Act 1940 (DCA). The
office of the Drug Controller General of India (DCGI) deals with the matters related to clinical
trials, product standards, product approvals and introduction of new drugs in the country as well
as licenses for import of new drugs. The application for approvals is to be attached with the
following documents.
• Introduction letter describing the drug and therapeutic class
• Information related to Clinical and pharmaceutical
• Animal pharmacology
• Animal toxicology
• Report of Clinical pharmacology trials conducted on Human subject (Phase I)
• Phase II Exploratory clinical trials reports
• Phase III trials on Confirmatory clinical study
• Special studies, if any
• In case imported drug the Regulatory status of other countries
• Post Marketing information
In case the drug is already approved and marketed in other counties, then required to submit
phase III studies conducted on minimum 100 volunteers in 3-4 locations in India. Suppose the
drug is imported in the public interest, then DCGI may do away with the need for local clinical
trials. However, the clinical trials data conducted in other countries have to be submitted for
approval.
1.4 GLOBAL PHARMACEUTICAL R & D SCENARIO
Pharmaceutical industry ranks the highest among rest of the high
in the world (EFPIA 2012). R & D is the mainstay of pharmaceutical industry and spends a
large amount of money despite low success rate due to which the pressure on pharmaceutical
companies is very high to improve R & D productivity.
collaborative research with leading academic institutions as well as outsource R & D activities
selectively to low cost highly skilled counties in the world.
Despite good intensions, research still is a profit driven activity with number of
developing specialist products (
effluent community than poor patient with primary care products. Country like India with
quality infrastructure and scientific talent must be acti
sufferings from deadly diseases affecting the world over.
Source: IMS Health, New Product Focus, Jan 2011.
1.4.1 Global Spending on Research & Development
Global spending on pharmaceutical R &
period. The estimated expenditure on R & D for 2011 stands at $135bn world
0
5
10
15
20
25
2000 2001 2002
Nu
mb
er
of
NC
E L
au
nch
es
Chart 2.1 NCE Launches driven by fewer Primary Care
Specialist driven
GLOBAL PHARMACEUTICAL R & D SCENARIO
Pharmaceutical industry ranks the highest among rest of the high-tech manufacturing industries
). R & D is the mainstay of pharmaceutical industry and spends a
large amount of money despite low success rate due to which the pressure on pharmaceutical
companies is very high to improve R & D productivity. Companies, therefore,
collaborative research with leading academic institutions as well as outsource R & D activities
selectively to low cost highly skilled counties in the world.
Despite good intensions, research still is a profit driven activity with number of
developing specialist products (Chart 2.1) that earn more revenue to the firm while serving
effluent community than poor patient with primary care products. Country like India with
quality infrastructure and scientific talent must be active drug R & D to eliminate human
sufferings from deadly diseases affecting the world over.
: IMS Health, New Product Focus, Jan 2011.
Spending on Research & Development
Global spending on pharmaceutical R & D has touched US$ 1.1 trillion over the last 10 year
period. The estimated expenditure on R & D for 2011 stands at $135bn world-wide, which is an
2002 2003 2004 2005 2006 2007 2008 2009Year
NCE Launches driven by fewer Primary Care
Products
Specialist driven Primary care driven
tech manufacturing industries
). R & D is the mainstay of pharmaceutical industry and spends a
large amount of money despite low success rate due to which the pressure on pharmaceutical
Companies, therefore, resorts to
collaborative research with leading academic institutions as well as outsource R & D activities
Despite good intensions, research still is a profit driven activity with number of firms engaged in
) that earn more revenue to the firm while serving
effluent community than poor patient with primary care products. Country like India with
ve drug R & D to eliminate human
D has touched US$ 1.1 trillion over the last 10 year
wide, which is an
2009 2010
increase of 4.9% over 2010. This clearly indicates that R & D undoubtedly is the key driver of
the growth of pharmaceutical industry across the world (EvaluatePharma 2012)
Among regions which spends the largest on R & D is led by USA with more than USD 40.7
billion (46%), followed by Europe with USD 37.8 billion (42%) and Japan USD 10.8 billion
(12%) (EFPIA 2012).
Among Europe UK spends about $6.75 billion, Germany $6.54 billion, Switzerland $6.28 billion
and rest of Europe spends $18.23 billion. Europe accounts 5 out of top 10 pharmaceutical
companies in the world in terms of sales and R & D investments.
Japan is another major pharmaceutical R & D spender in the world with an expenditure of ¥
1276.0 billion by the end of 2010. China is a fast growing pharmaceutical market with an
increasing focus on R & D and a destination for R & D outsourcing in th
1.4.2 World’s Leading Companies with Biggest R & D Investment
The global pharmaceutical R & D composition symbolizes the largest firms dominating the
global R & D investment and holds the maximum patents too.
Europe, 37.8, 4
2%
Japan, 10.8, 12
%
Chart 2.2 Global Region
increase of 4.9% over 2010. This clearly indicates that R & D undoubtedly is the key driver of
f pharmaceutical industry across the world (EvaluatePharma 2012).
Among regions which spends the largest on R & D is led by USA with more than USD 40.7
billion (46%), followed by Europe with USD 37.8 billion (42%) and Japan USD 10.8 billion
Among Europe UK spends about $6.75 billion, Germany $6.54 billion, Switzerland $6.28 billion
and rest of Europe spends $18.23 billion. Europe accounts 5 out of top 10 pharmaceutical
companies in the world in terms of sales and R & D investments.
Japan is another major pharmaceutical R & D spender in the world with an expenditure of ¥
1276.0 billion by the end of 2010. China is a fast growing pharmaceutical market with an
increasing focus on R & D and a destination for R & D outsourcing in the world.
World’s Leading Companies with Biggest R & D Investment
The global pharmaceutical R & D composition symbolizes the largest firms dominating the
global R & D investment and holds the maximum patents too.
USA, 40.7,
46%
, 10.8, 12
Global Region-wise R&D Spending 2010 US$ Bn
increase of 4.9% over 2010. This clearly indicates that R & D undoubtedly is the key driver of
Among regions which spends the largest on R & D is led by USA with more than USD 40.7
billion (46%), followed by Europe with USD 37.8 billion (42%) and Japan USD 10.8 billion
Among Europe UK spends about $6.75 billion, Germany $6.54 billion, Switzerland $6.28 billion
and rest of Europe spends $18.23 billion. Europe accounts 5 out of top 10 pharmaceutical
Japan is another major pharmaceutical R & D spender in the world with an expenditure of ¥
1276.0 billion by the end of 2010. China is a fast growing pharmaceutical market with an
e world.
World’s Leading Companies with Biggest R & D Investment
The global pharmaceutical R & D composition symbolizes the largest firms dominating the
D Spending 2010 US$ Bn
USA
Europe
Japan
The table (Table 2.2) below shows in 2010 company Merck, USA spent the highest amount
(US$ 11 billion) in research and development in the world, followed by Pfizer, USA (US$ 9.41
billion) and Roche, Switzerland (US$ 8.61 billion). Whereas a number of smaller firms from the
rest of the world are solely depending on manufacturing and marketing of drugs that have gone
off-patent in the market, thus spends little or nil on R & D.
Table 2.2: Leading Pharma R & D Spenders in the World for 2010
2011
Rank
Company Country R & D spend
($ Billions)
R & D
spending % to
Sales
1 Merck USA 11.00 16.09%
2 Pfizer USA 9.41 16.90%
3 Roche Switzerland 8.61 12.77%
4 Novartis Switzerland 7.10 27.64%
5 GlaxoSmithKline UK 6.13 22.03%
6 Sanofi-Aventis France 5.15 16.92%
7 Eli Lilly USA 4.88 12.61%
8 Johnson & Johnson USA 4.43 19.79%
9 AstraZeneca UK 4.20 23.13%
10 Abbott USA 3.72 18.71%
Sources: IMAP Healthcare Report (2011), “Pharmaceutical & Biotech Industry Global Report-2011” http://www.imap.com/imap/media/resources/IMAP_PharmaReport_8_272B8752E0FB3.pdf
The data below (Table 2.3) shows that the extent of money companies spent on its research and
development activities that determines the success of producing more blockbuster drugs, such
companies dominates the world pharmaceutical market. The table below indicates companies
with their top earning products.
Table 2.3: Top Blockbuster Products in the World for 2010
2011 Rank
Company Country Top-Selling Drugs USD billions
1 Pfizer USA Lipitor Enbrel Lyrica
10.7 3.3 3.1
2 Novartis Switzerland Diovan/Co-Diovan Gleevec/Glivec Lucentis
6.1 4.3 1.5
3 Sanofi-Aventis France Lantus Lovenox Taxotere
4.7 3.7 2.8
4 Merck USA Singulair Remicade Januvia
5.0 2.7 2.4
5 Roche Switzerland Avastin MabThera/Rituxan Herceptin
6.8 6.7 5.7
6 GlaxoSmithKline UK Seretide/Advair Pandemic Flu Vaccine Flixotide/Flovent
7.9 1.8 1.2
7 AstraZeneca UK Crestor Nexium Seroquel
5.7 5.0 4.1
8 Johnson & Johnson USA Remicade Procrit Risperdal
4.6 1.9 1.5
9 Eli Lilly USA Zyprexa Cymbalta Alimta
5.0 3.5 2.2
10 Abbott USA Humira Trilipix/TriCor Kaletra
6.5 1.6 1.3
Source: IMAP Healthcare Report (2011), “Pharmaceutical & Biotech Industry Global Report-2011” http://www.imap.com/imap/media/resources/IMAP_PharmaReport_8_272B8752E0FB3.pdf
1.4.3 Allocation of R & D Investments by Function
In terms of R & D allocation, clinical trials (Phase I
consumes large chunk of research budgets (US 43%, Europe 58%)
studies (synthesis and extraction, biological screening and pharmacological testing, toxicology
and safety testing, pharmaceutical dosage/formulation and stability) US 26% and Europe 25%.
While Phase IV (pharmacovigilance) and other approval process uses the rest of the budget
allocation (EFPIA 2002).
Source: PhRMA, Annual Membership Survey 2012 (percentages calculated from 2010 data)
1.4.4 Global R & D Pipeline
0%
100%
26% 25%
% o
f S
pe
nd
ing
Chart 2.3
In terms of R & D allocation, clinical trials (Phase I – III) required for approval of medicine
consumes large chunk of research budgets (US 43%, Europe 58%), followed by pre
extraction, biological screening and pharmacological testing, toxicology
and safety testing, pharmaceutical dosage/formulation and stability) US 26% and Europe 25%.
While Phase IV (pharmacovigilance) and other approval process uses the rest of the budget
: PhRMA, Annual Membership Survey 2012 (percentages calculated from 2010 data)
Global R & D Pipeline
43%
7% 13% 11%25%
58%
6% 10% 2%
Clinical Phases
Chart 2.3 R & D Spending by Stages
US Europe
III) required for approval of medicine
followed by pre-clinical
extraction, biological screening and pharmacological testing, toxicology
and safety testing, pharmaceutical dosage/formulation and stability) US 26% and Europe 25%.
While Phase IV (pharmacovigilance) and other approval process uses the rest of the budget
Europe
Source: IMS Health, R & D Focus, Jun 2010
As per IMS Health, cancer and diabetes drugs shows long-term promise in the global
R & D pipeline with great improvements in the early-stage product trials for pharmaceutical
industry.
1.5 INDIAN RESEARCH & DEVELOPMENT OVERVIEW
India predominantly spends very little on R & D. It is after 2005 TRIPS agreement India started
looking at R & D seriously. Though there was an initial growth in the R & D spending, but it
has declined considerably due to various factors (Chart 2.7). India’s share to the overall global
R & D investment stands very low at US$ 24.1 billion (roughly 2.1%) as per the chart (Chart
2.5) represented below.
110 102 116 120 130 131 138 139 142
572648
734893 941
9951093
11591205
807864
933990
10621130
1231 12541368
274 258 284 287 299 290 334 340 363
0
200
400
600
800
1000
1200
1400
1600
2002 2003 2004 2005 2006 2007 2008 2009 2010
Act
ive
Mo
lecu
le in
th
e P
ipe
lin
e
Chart 2.4 Global R & D Pipeline
Pre-reg/reg
Phase I
Phase II
Phase III
Source: Battelle, R & D Magazine
However in 2012, India was the 7
largest in 2011. India is expected to retain this position in 2013, with R & D investments
increasing to USD 45.2 billion from USD 38 billion in 2011 (Deloitte 2011) as shown below
(Chart 2.6).
Source: Battelle, Aranca Research. Notes: PPP
Japan
13%
China
12%
India
2%
Chart 2.5
33
0.80%
0
10
20
30
40
50
2010
US
D B
n
Chart 2.6
R&D expenditure (PPP)
However in 2012, India was the 7th largest country in terms of R & D investments, up from 8
India is expected to retain this position in 2013, with R & D investments
increasing to USD 45.2 billion from USD 38 billion in 2011 (Deloitte 2011) as shown below
Battelle, Aranca Research. Notes: PPP - Purchasing Power Parity, F - Forecast
US
34%
Europe
24%
ROW
15%
Chart 2.5 Global R & D Spending 2009
Total USD 1143.2 Billion
38 4045
0.80%
0.85%0.85%
0.90%
2011 2012 2013F
Chart 2.6 R & D Expenditure in India
R&D expenditure (PPP) % of GDP
largest country in terms of R & D investments, up from 8th
India is expected to retain this position in 2013, with R & D investments
increasing to USD 45.2 billion from USD 38 billion in 2011 (Deloitte 2011) as shown below
0.74%
0.76%
0.78%
0.80%
0.82%
0.84%
0.86%
0.88%
0.90%
0.92%
1.6 VIEWS ON R & D INVESTMENT FROM INDUSTRY CAPTAINS
In a pharma summit 2007, “Dr. Swati Piramal of Nicholas Piramal, said that the value of R & D
in India would be over USD1200 billion by 2050” (Express Pharma 2007).
Renuka Ramnath of ICICI Venture Fund said that “pharmaceutical industry is going through a
tremendous change from imitation to innovation. However, she agrees innovation is the need of
the hour, but R & D is considered still a high risk, high cost segment (Express Pharma 2007).
The Chairman of Cadila Healthcare Mr. Pankaj R Patel stated that “while there are plenty of
opportunities unfolding in the pharmaceutical industry, but it is the R & D which will play a key
role in leveraging India’s potentials in pharmaceuticals that benefits the millions” (Express
Pharma 2007).
“Mr. Shrinivas Dempo, the CII Chairman for Western Region view that low R & D penetration
in country will pose a major challenge for the industries in India”(Express Pharma 2007).
1.7 PHARMACEUTICALR & D IN INDIA
Despite industry’s many laudable achievements in production, technology and process chemistry
skills, the pharmaceutical industry in India is yet to discover a new drug molecule of marketable
grade in the country. According to (Chaudhuri 2010), since 1947 Indian pharmaceutical R & D
has developed 17 new drugs, but none of these drugs could find commercial success(Reji K
Joseph 2010). Indian companies spend very low (less than 2%) on R & D as compared to their
global counterpart who spends on an average 15 per cent of their sales turnover on R & D. The
chart below (Chart 2.7) shows the pattern of R & D investments by Indian companies to the
percentage of their sales turnover.
Chart 2.7:R & D Expenditure to the percentage of Sales turnover of
Indian Pharmaceutical Industry from 1990 - 2010
Source: Prowess. www.ris.org.in/images/RIS_images/pdf/dp176_pap.pdf
There may be many factors responsible for the low R & D investments and intensity in the
country such as (i) Indian companies were predominantly engaged in manufacturing of generic
drugs, (ii) recognition of process patent enabled Indian companies to manufacture and market
patented drugs conveniently using reverse engineering technology resulting less concentration on
new drug development, (iii) new drug development is lengthy and expensive. However, the
domestic R & D start picking up as India got closer to TRIPS 2005.
1.7.1 Leading Indian Pharmaceutical Companies with R & D Spending
during 2012
R & D is the key to pharmaceutical industry, but the combined spending on R & D inclusive of
expenses for the production, generics and new drug delivery systems (NDDS) by leading Indian
pharmaceutical companies during 2012 is as little as Rs. 3370 crores (Chart 2.8), which is
roughly 6% of Pfizer’s R & D expenditure of USD 9.5 billion during 2010.
Source: Ace Equity
Even the combined R & D investment of India’s top 12 pharmaceutical companies during 2005 –
2013 amounts to only $3.66 billion (Chart 2.9), which is only 39 per cent of Pfizer’s R & D
investment in a single year during 2010. The fact of the matter is that despite the introduction of
strong product patent and the advantage of being a low cost country, India has not made
significant improvements in R & D, particularly the new drug development.
7%
5%
9%9% 5%
9%
13%
4%
8%
3%
6%5%
0
100
200
300
400
500
600
700
0%
2%
4%
6%
8%
10%
12%
14%
Rs.
Crs
Chart 2.8 Pharma R & D Expenditure during 2012
R&D Expenditure % to Sales turnover
Source: Ace Equity, http://www.accordfintech.com/ace-equity 1.7.2 Pattern of R & D Investments in India
The culture and belief of R & D investments across the world follow an identical pattern with a
few industries leading the pack, as usual is: healthcare, computing, auto and electronics. India is
no exception to this global phenomenon as the analysis of the sector wise spending outlay for the
Department of Scientific and Industrial Research (DSIR), Government of India shows that
among various industries, pharmaceutical sector stand in second position in terms of R & D
spending (Deloitte 2011) as shown below:
5094 4927 4443 3460 2940 2687 2189 2107 1646 1485 1366 1108
10%
5%
11%
8%
4%
10%
11%
4%
8%
4%
10%
6%
0%
2%
4%
6%
8%
10%
12%
0
1000
2000
3000
4000
5000
6000
Rs
Crs
Chart 2.9 Ave. R & D expenditure % to Sales Turnover
from 2005-13
Ave. Sales Revenue Ave. R&D Expenditure % to Turnover
Chart 2.10:Sector wise R & D outlay under the XI Plan, Government of India
Source: Research & Development expenditure- A concept paper – July 2011, by Deloitte.
As per the study (Jean O. Lanjouw et.al 2005), the pattern of R & D investments and intensity by
Indian pharmaceutical companies found to be heavily tilted towards specialist diseases rather
than primary care treatment which are prevalent in Indian conditions. This clearly indicates a
dangerous trend followed by the private sector investors of protecting profit at the cost of
neglected diseases of the poor world.
When profit is outdone the social good, the option before the government is to step in to save the
public health of the nation before leading to serious health crisis. Hence, it is of great
significance for public sector pharmaceutical companies in India to be revived and involved in
active research and development of new drug molecules especially of neglected diseases with the
support of the Government.
1.7.3 Indian Pharmaceutical R & D Pipeline
Although, new drug research is a high-risk high-return field, the Indian pharmaceutical
companies are putting their best efforts to move up in the R & D value chain to book place
among the innovator league. It is therefore encouraging to observe that many Indian companies
are into new drug discovery process in the areas of infections, diabetes, inflammation,
respiratory, obesity and cancer ailments (Table 2.4), and companies leading the pack are Dr.
Reddy’s, Ranbaxy, Glenmark, Piramal Healthcare, Biocon and Lupin Laboratories.
Table 2.4: R & D Pipeline of Indian Pharmaceutical Companies
Compound Therapeutic Area Status Dr Reddy’s
DRF 2593 Metabolic disorders Ongoing. Phase III Several Compounds Respiratory disorders Ongoing. Phase I DRL 17822 Metabolic disorders /
Cardiovascular disorders Ongoing. Phase I
Ranbaxy RBx 11160 (Arterolane) Anti-malaria combination
drug Ongoing. Phase III Studies in India and Thailand
Unnamed Respiratory problems Ongoing. Completed Phase I in collaboration with GSK and received related milestone payment from GSK
Glenmark GRC 10693 Naturopathic Pain,
Osteoarthritis & other Agonist inflammatory pain
Ongoing. Entered phase II trials
GRC 8200 (Melogliptin)
Diabetes type-2 Ongoing. Entered phase III
GRC 3886 (Oglemilast) COPD, Asthma Ongoing. Phase II Completed GRC 4039 (Revamilast) Rheumatoid arthritis,
multiple sclerosis and other inflammatory disorders
Ongoing. Entered phase II
GBR 500* Multiple Sclerosis and inflammatory disorders
Ongoing. In phase I
GRC 15300 Osteoarthritis pain, Naturopathic Pain, Skin Disorders
Ongoing. In phase I
GBR 600* Anti-platelet, Adjunct to Ongoing. Completed
Piramal Healthcare P 276 Oncology (head and neck
cancer) Ongoing. Entered phase II. Trials are going on in India, US and Australia.
P 276 combination with Gemcitabine
Oncology (pancreatic cancer)
Ongoing. Phase I.
P 276 combination with Radiation
Oncology (pancreatic cancer)
Ongoing. Phase I.
P 1446 Oncology Ongoing. Phase I in India and Canada
NPB-001-05-Bcr-Abl Oncology (chronic myeloid leukemia)
Ongoing. In phase II.
P 13 Kinase Oncology Ongoing. Lead selection. Microbial leads Oncology Ongoing. Lead selection. Target X - Merck Oncology Ongoing. Lead selection. Target Y - Merck Oncology Ongoing. Lead selection. NPS 31807-TNFa Inflammation (rheumatoid
arthritis) Ongoing. Phase II Completed
P 979-TNFa Inflammation Ongoing. In preclinical. P 3914 Inflammation Ongoing. In preclinical. IL 6 Inflammation Ongoing. Lead selection. TNFa Inflammation Ongoing. Lead selection. P 1736 – Non PPARy Diabetes and metabolic
disorders Ongoing. Phase I.
P 1201 - Lilly Diabetes and metabolic Ongoing. Phase I.
PCI/ Acute Coronary Syndrome
preclinical trials
Crofelemer Anti-diarrhoeal Successfully completed phase III. In-licensed from Napo Pharmaceuticals, USA.
Biocon PEG-GCSF* Oncology Ongoing. Pre-clinical Bmab 100* Oncology Ongoing. Pre-clinical Bmab 200* Oncology Ongoing. Pre-clinical BVX-20* Oncology Ongoing. Pre-clinical IN 105 (Oral Insulin)* Diabetes Ongoing. Phase III T1h* Inflammation Ongoing. Phase II BIOMAb EGFR (Glioma, NSCLC)*
Oncology Ongoing. Phase III
disorders P 2202 - Lilly Diabetes and metabolic
disorders Ongoing. Phase I.
DGAT1 Diabetes and metabolic disorders
Ongoing. Lead selection.
NPH30907# -Dermatophytes
Anti-infective Ongoing. Phase I Completed
PP 9706642# – Anti-HSV2
Anti-infective Ongoing. Pre-clinical
PM 181104 – MRSA/VRE
Anti-infective Ongoing. Toxicity studies.
Lupin LL 2011# Anti-migraine (Amigra) Ongoing. In phase III.
LL 4218 Anti-psoriasis (Desoside-P) Ongoing. In phase II
LL 3858/4858# TB (sudoterb) Ongoing. In phase I
LL 3348 Anti-Psoriasis (Herbal Desoris) Ongoing. In phase II
Unnamed Diabetes type 2 Ongoing. In preclinical Unnamed Rheumatoid arthritis Ongoing. In preclinical
Source: Based on the annual reports of the companies from 2001 - 2007 www.ris.org.in/images/RIS_images/pdf/dp176_pap.pdf
However, most of the R & D efforts of Indian companies are concentrated in chronic lifestyle
disease segments such as cancer and diabetes, which is not a good sign when compare diseases
relevant to tropical regions like India (Reji K Joseph 2010).
While there are roughly about 70 – 80 new molecules in the pipeline at different phases of
clinical trials from Indian players, Dr. Reddy’s Laboratories’ is the first Indian company to
indigenously develop a New Chemical Entity (NCE) called ‘Balaglitazone’ an anti-diabetic
agent. However, after a prolonged phase of development spread over six to seven years in
United States and Europe, the new anti-diabetic molecule has failed due to the side-effect
profiles of the glitazone family compounds (DNA 2011).
Dr. Reddy’s has invested a large amount of money over 6 - 7 years to develop the anti-diabetic
molecule with no success. In the case of Lupin’s TB research program, the company is already
in the process of terminating the program in favour of drug that give better returns such as
diabetes and anti-inflammatory which are globally very hot areas these days (Business World
2010).
1.7.4 Regulatory Filing by Indian Companies with USFDA
The US legislation of Hatch-Waxman Act (patent restoration act 1984) has facilitated the entry
of generic versions of previously approved innovator drugs to be brought into the market. Many
Indian companies have taken the advantage of this provision and made several regulatory filing
with USFDA for Drug Master File (DMF) and Abbreviated New Drug Application (ANDA).
This has brought a new dimension to India’s exports to well established international market like
US and Europe. India has made great inroads into these markets with its generic version of the
inventor drugs.
Drug Master File (DMF): A Drug Master File is a submission of detailed information about
facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of
one or more human drugs to the US Food and Drug Administration (US-FDA), which may later
be used to support an investigational new drug application (IND), a new drug application (NDA),
an abbreviated new drug application (ANDA), export application or amendments and
supplements to any of these (USFDA 2014).
Abbreviated New Drug Application (ANDA): ANDA is a generic drug application termed as
‘abbreviated’ because they are generally not required to include pre-clinical and clinical data to
establish safety and efficacy and are only required to demonstrate the bioequivalence of the
product).
It’s quite encouraging to find the achievements of Indian companies with respect to DMF filings
and ANDA with USFDA despite there being a stringent regulatory environment. There are total
962 DMF filings and 537 ANDA approvals during 2001 to 2010 from leading Indian
pharmaceutical companies as detailed below (USFDA 2014).
Table 2.5: DMF Filing and ANDA Approvals by USFDA
Company 2011 - 2010
ANDA DMF
Aurobindo 99 144
Dr Reddy's 83 153
Ranbaxy 81 101
Sun 67 70
Wockhardt 64 43
Glenmark 46 45
Lupin 40 100
Orchid 30 77
Matrix 17 139
Cipla 10 90
Total 537 962
Source: US FDA 2011
1.8 R & D BY MNCs OPERATING IN INDIA
There are approximately 34 foreign drug companies operating in India, among them 15 are
world’s 20 largest pharmaceutical companies. Despite their strong presence, the track record of
developing or introducing new drug molecules in India is very poor. However, they still
command a good market share about 30 percent of the total Indian pharmaceutical market.
The introduction of strong patent law saw many MNCs setting up their R & D centres in India.
Currently there are more than 300 R & D Centres in India by MNC (Deloitte 2011). Although
there is considerable increase in number of patents filed by MNCs post 2005 TRIPS agreement
in India, the amount of patents filed for doing indigenous research in the country is somewhat at
less than 20 per cent of the total patent filed (Deloitte 2011). This clearly points out that the R &
D centres including MNCs are yet to produce a new drug molecule in India.
According to FICCI (FICCI-ORF Report 2009), MNCs are yet to launch new products in India,
but they have made investments in new production facilities and R & D centres. They are also
engaged in contract manufacturing, clinical trials, and other forms of outsourcing activities in
India mainly to reap the benefit of India’s rich talent pool, low costs etc.
1.9 THE R & D ECOSYSTEM IN INDIA
India is the fourth largest economy by PPP in the world. It has a healthcare market of USD 68.4
billion in 2011 (IBEF study 2013). Country has some of the finest pharmaceutical and biotech
companies operating in the domestic sector with robust capability and scientific skill to develop
new drug molecules. India has an enabling R & D environment with stable economic, political
and legal system, quality infrastructure, excellent IT support with digital and transport
connectivity, which are pre-requisite to conduct flawless drug research and development
activities in the country.
There are more than 150 established Clinical Research Organization who conducts various
clinical studies for MNCs as well as Indian pharmaceutical companies, fair number of hospitals,
physicians, nurses, diagnostic labs etc., spread across the country, which can easily support any
clinical studies in the country. Despite massive infrastructure at its disposal, the drug research
in the country is still at the infant stage.
The table (table 2.6) below shows the statistics of India’s economic advantages to be exploited
for creating India as hub of drug research and development.
Table 2.6: India and Its Resource Advantage
Indian Statistics
(2007 - 2012)
1 Population 1.21 billion
2 GDP $2.2 trillion
3 GDP growth (average) 8.0%
4 Universities 409
5 Key Research Institutes 14
6 Pharmacy Colleges 1162
7 Medical Colleges 200
8 M. Pharms and PhD offering colleges 191
9 Pharmacy Students 51716
10 Medical Graduates 22000
11 Master and PhD students 5648
12 Healthcare Market $68.4 billion
13 Per capita healthcare spending $57.90
14 Total Pharmaceutical Market 107809 Cr.
15 Domestic Market 62055 Cr.
16 Export Market 45754 Cr.
17 Pharmaceutical Companies 10563
18 Biotech Companies 350
19 Clinical Research Organizations 100
20 USFDA approved plants 160
21 Dedicated Pharma R & D centres 250
22 Researchers 155000
23 R & D expenditures to Sales 4.5%
24 Hospitals 15622
25 Health Centres 163181
25 Diagnostic Labs 14000
26 Practicing Physicians 600000
27 Nurses 737000
Source: GOI-DoCP annual report 2011-12, IBEF 2013, CIA Fact book, CDSCO, Mediminds 2007
However, there are plenty of studies which indicate that India is significantly ahead in chemistry
services such as analogue preparation, analytical chemistry, focus library, combinatorial
chemistry, structural chemistry, structural drug design, computer aided drug design, high
throughput screening and assay development. It lacks enough skills in biology and medicinal
chemistry, which are fundamental prerequisites to undertake new drug development process
(WHO Report 2006).
1.10 CLINICAL RESEARCH AND OUTSOURCING SERVICES
Global clinical research industry is estimated to be US$ 64 billion (FICCI report on Clinical
Research), witnessing key transition in the area of drug development. Due to increasing costs,
declining productivity and rising drug development timelines have compelled many leading
pharmaceutical and biotechnology companies to look for new and smarter ways of conducting
clinical research. Emerging markets like India, China, Latin America and Eastern Europe offers
great scope for clinical research outsourcing business.
The Indian clinical research industry, with its strategic advantages, is estimated to be USD 2.2
billion with a high growth rate of 23% (Invest India 2012). Outsourcing in India has gradually
moved up the value chain from intermediates and APIs to new drug discovery, clinical trials,
marketing, and sales. A firm subcontract their clinical research activities to another firm, may be
in another country, due to factors like:
• Time and Cost Competitiveness
• Clinical Research Expertise
• Healthcare Infrastructure
• Scientific Feasibility and Favourable Regulatory Environment
Time and Cost Competitiveness: Sluggish sales due to patent going off in the home market,
declining R & D revenues, and rising costs have made many MNCs to outsource their R & D
activities to low cost destinations in the world. India offers a significant cost advantage of
roughly 40-60% lower than in developed countries and around 10-20% lower than emerging
economies (FICCI report on Clinical Research). It can employ more scientists and investigators
at low cost. Therefore, MNCs across the world prefer to outsource their clinical trial activities to
low cost countries rather than continuing in the high cost home countries.
Clinical Research Expertise: India offers rich and growing pool of talented and experienced
medical professional with apt chemistry and English language skills. India also achieved a
tremendous record in the area of development and cost-effective chemical syntheses of different
drug molecules in the country (Invest India 2012).
Healthcare Infrastructure : India is a favoured destination for clinical research outsourcing for
MNCs due to its urban healthcare infrastructure in terms of beds/ physicians/ nurses per 1000
global average. It has high levels of compliance with internationally harmonized standards in the
specific area of clinical research with respect to Good laboratory Practices (GLP), Good Clinical
Practices (GCP), and current Good Manufacturing Practices (cGMP) including many US FDA
approved plants. India also offers well developed communication networks with information
technology capabilities (Pharmainfo.net 2010).
Scientific Feasibility and Favourable Regulatory Environment: The diverse disease profile
and abundance of study subjects across major therapeutic segments provides a perfect setting for
clinical trials in India. In addition, a favourable regulatory environment allows a flawless
conduct of global trials.
Table 2.7: Clinical Trials Registered with CTRI India
Year No. of DCGI approved trials
2007 3
2008 65
2009 391
2010 500
2011 321
2012 262
Total 1548
Source: http://www.cdsco.nic.in/DCG(I)